It's evolution, baby -how institutions can improve without critical junctures Policy Brief (original) (raw)
It’s Evolution, Baby – How Institutions can Improve without Critical Junctures
Policy Center for the New South, 2018
Daron Acemoglu and James Robinson caught policymaker’s attention to the critical role of institutions for development. Their work gives too much emphasis to the prospects of revolution, however. A reading of the World Bank’s World Development Report of 2017 points to directions that all actors involved in the process, whether domestic or international, elite or non-elite, can take to improve societies.
Institutions and Development: What We (Think We) Know, What We Would Like to Know
This paper takes the form of an extended literature review, outlining the key ideas that will need to be developed further in the course of the IPPG Research Programme. After an extended introduction, the next two sections are conceptual, the former elucidating key concepts and definitions, the latter examining various approaches to the analysis of institutions relevant for economic growth. Then the paper reviews much of the available evidence linking institutions and growth and covers in some detail the evidence regarding economic institutions, confirming that institutions matter. However, the findings from different studies are far from consistent in terms of identifying exactly what it is that matters. Given the prevalence of weak or poorly functioning states amongst the poorest countries of the world, the paper also reviews literature on the political aspects of development, particularly in relation to the role of institutions. Likewise, the paper selectively illustrates the ide...
International Journal of Business and Social Research, 2016
Strong institutions are often viewed as part answers to Africa's development dilemma. But given the resource constraints of many African countries, one would need to be selective as to which institution or institutions to commit scarce resources. An attempt to strengthen all institutions at the same time could be rather daunting. And many questions would remain. First, what is the relative importance of one institution to another? Second, whether all institutions exert an equal impact on comprehensive development as they do on economic growth. This paper on Institutions and Development, first published in 2007 tries to answer these questions. It has been modified (in the 2016 version) for three reasons-1, to bring the data up to date, 2, to use a different and possibly more accurate econometric model (fixed effect) for the analysis and 3, to assess if the same institutions remain more critical than others, as observed in 2007. Even though the rule of law institution would seem, in this revised version, to have a slightly better impact on GDP/Capita, government effectiveness is still dominant in both non-differenced and differenced models, especially when comprehensive development is considered.
2004
This paper addresses the political foundations for economic development in Africa and does so by exploring two basic themes: political accountability and political order. We say that political elites are accountable when, in order to retain office, they must employ power to serve the interests of those whom they rule. By political order we mean the extent to which people employ coercion to protect property rights rather than to trespass upon them. Where there is accountability, many hold, then those with power make policies that enhance the welfare of private citizens, as by rendering them more prosperous (e.g. World Bank 1991). And where there is political order, then there is security for property rights, rendering it in the interests of private agents to invest, to labor, and to generate higher levels of income .
"If you have already not seen this book by Matt Andrews (Harvard University), you are certainly missing an important part of the ongoing debates in the field of international development. The book offers a wonderful diagnosis of factors that have limited the success of institutional reforms in the developing countries. The book also also a provides a prescription for success in the form of a well-developed approach called 'Problem-Driven Iterative Adaptation' (PDIA). In the review, which is forthcoming in The European Journal of Development Research, I deploy insights from Political Economy of Institutions to engage with Matt's proposal for successful institutional reforms."
A note on institutions as the root cause of development–
Preface "Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia's or Egypt's? If so, what, exactly? If not, what is it about the "nature of India" that makes it so? The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else-Robert Lucas" (Lucas 1988). In May 2008 we organized a workshop on "Institutions, Innovation and Development" at Aalborg University (see: http://www.business.aau.dk/wiid/). It was a successful event which resulted in fruitful and interesting interaction among participants. Another, and more tangible, output of the workshop is this collection of the working papers published in the working paper series of the Department of Business Studies, Aalborg University. The main motivation for the workshop is encapsulated in the quote from Robert Lucas above. Moreover, it is our conviction that research, within evolutionary economics, on innovation and technological change holds great potential for explaining and guiding economic development. The opening statement in the INNOGRIPS workshop on Innovation & Development which was held in Manchester in April 2008, nicely presents the argument: "Innovation studies have mainly originated in, and focused on, industrialised economies. In some ways this is not surprising, since much of the investment and pace-setting in innovation has stemmed from these countries. Though it took a long time for many economists to realise it, technological innovation has been widely recognised as a major factor in the growth of these economies. There is now increasing awareness of, and interest in, the importance of innovation for the so-called "less developed countries" (INNO GRIPS, 2008). The workshop put attention to themes as learning, innovation and institutional economics. Our intention was to strengthen research on developmental issues within the IKE-group through the involvement of other research groups and independent researchers (from inside or outside Aalborg University) with similar interests. The idea was to stimulate a positive and open atmosphere of informal interaction and discussion rather than standard presentations. Such a format is moreover suitable for outlining and/or identifying new important research areas.
One More Time: What are Institutions and How Do They Change?
Policy Research Working Papers, 2018
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
Institutional Bypass: An Alternative for Development Reform
SSRN Electronic Journal, 2000
Beginning in the 1990s, an institutional perspective on development has become increasingly prominent in development thinking, captured in the mantra, "Institutions Matter," or "Governance Matters." Based on the assumption that "institutions matter", there has been a massive surge in development assistance for institutional reform projects in developing and transition economies involving investments of many billions of dollars. However, these reforms have had mixed to disappointing results thus far. Against this backdrop, this paper identifies successful institutional reforms, and claims that they have one common feature: instead of trying to fix dysfunctional institutions, as most failed reforms do, they simply bypass them. For this reason, they will be called "institutional bypasses". Like a "coronary bypass" surgery, an institutional bypass creates new pathways around clogged or blocked institutions. Institutional bypass uses the same strategy: it does not try to modify, change or reform existing institutions. Instead, it tries to create a new pathway in which efficiency and functionality will be the norm. Understanding what is a bypass and how it works can provide answers to an important question in the law and development literature: how to reform dysfunctional institutions.
Institutions and economic development: theory, policy and history
The article tries to advance our understanding of institutional economics by critically examining the currently dominant discourse on institutions and economic development. First, I argue that the discourse suffers from a number of theoretical problems – its neglect of the causality running from development to institutions, its inability to see the impossibility of a free market, and its belief that the freest market and the strongest protection of private property rights are best for economic development. Second, I point out that the supposed evidence showing the superiority of 'liberalized' institutions relies too much on cross-section econometric studies, which suffer from defective concepts, flawed measurements and heterogeneous samples. Finally, I argue that the currently dominant discourse on institutions and development has a poor understanding of changes in institutions themselves, which often makes it take unduly optimistic or pessimistic positions about the feasibility of institutional reform.
Institutions as Meso-factors of Development: A Human Development Perspective
Journal of Contextual Economics, 2019
This study borrows from Amartya Sen's capability approach in order to enrich the analytical tools with which to study the institutions and development link. By expanding on the theoretical notion of contextual conversion factors, I elaborate a conceptual framework with which it is possible to identify the channels through which institutions can affect development. I follow the human development paradigm for the conceptuali-zation of development and visualize institutions as features that characterize the context within which the life of individuals is embedded. In the attempt to refrain from a one-size-fits-all logic, I concentrate on the study of institutions at a level lying in between the country (macro) and the individual (micro). Therefore, I refer to the meso level for the analysis of institutions, which implies that the framework is adequate for studying institutions at a subnational level. This study attempts to contribute to the understanding of the institutions-development link through (i) the analytical framework proposed, (ii) an extension to commonly referred-to definitions of institutions and (iii) an accurate literature review that combines approaches of development economics and of institutional analysis. A meso approach to the study of institutions is thought to contribute to a better understanding of complementarities between local state capacity and macro-level policies and to the role that institutions can play in decreasing within-country poverty and inequality.
How Political Institutions Influence Development Outcomes
2019
What is the cause of global inequality? Why are some countries poor and why are others rich? Is it because of poor mismanagement, bad economic policies or the lack of capital? In recent years two scholars Daron Acemugolu and James Robinson have come up with new theory to explain the determinants of wealth and poverty that exists between states. In their thesis, they argue that the inequality that exists between states is the result of how institutions are created. Many western countries they explain are rich not due to the luck of chance or abundance of resources. Quite the contrary, wealth they argue is necessitated by inclusive and democratic political institutions which are fundamental to initiating economic growth and development. However, the rise of China, Vietnam, Russia and some of the East Asian states in this century has prompted some reconsideration of the democratic development theory. The rise of China and other authoritarian developmentalist states in the twenty first century raises an important question in development discourse-Can states without inclusive political institutions create free and inclusive economic institutions? In other words, is inclusive political institutions a precondition for economic development? This paper will argue that states with non-inclusive political institution can develop and prosper as evidenced by China and some of the East Asian countries. Moreover, the paper will highlight some of the theoretical short comings in the democratic development theory presented in the book "Why Nations Fail". More importantly, the paper will look at the China Model as an alternative to the democratic development model and examine if the Chinese development model can be transferred into the African context.
European Journal of Political Economy, 2013
This article reviews 'Pillars of Prosperity' by Timothy Besley and Torsten Persson and 'Why Nations Fail' by Daron Acemoglu and James Robinson. Both books are focussed on the role of institutions in determining the wealth of nations and the review compares and contrasts the different approaches contained in the two texts. The review also attempts to locate the texts within the broader literature in development and political economics and to link them to other recent work in these areas.
Social Institutions and Development Challenges
2003
A recent seminar in Mumbai attempted to adjudge the direction of change in existing social institutions and those established after independence, as well as the obstacles to forming effective social institutions in the country. In spite of the disheartening picture that emerges, of an iniquitous process in terms of development and empowerment, there are hopeful signs of fruitful alliances in various segments of society as well as of audible articulation of alternatives.